UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/x/ Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996, or
/ / Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _________ to _________
Commission File No. 2-81398B
PARKER & PARSLEY 83-B, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-1907245
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
303 West Wall, Suite 101
Midland, Texas 79701
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code: (915)683-4768
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /x/ No / /
Page 1 of 14 pages.
There are no exhibits.
<PAGE>
PARKER & PARSLEY 83-B, LTD.
(A Texas Limited Partnership)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including
interest bearing deposits of
$218,126 at March 31 and $243,858
at December 31 $ 218,626 $ 244,107
Accounts receivable - oil and gas sales 226,150 196,954
----------- -----------
Total current assets 444,776 441,061
Oil and gas properties - at cost, based
on the successful efforts accounting
method 20,973,483 20,977,361
Accumulated depletion (15,770,812) (15,667,506)
----------- -----------
Net oil and gas properties 5,202,671 5,309,855
----------- -----------
$ 5,647,447 $ 5,750,916
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 71,730 $ 113,554
Partners' capital:
Limited partners (23,370 interests) 4,951,009 5,009,377
General partners 624,708 627,985
----------- -----------
5,575,717 5,637,362
----------- -----------
$ 5,647,447 $ 5,750,916
=========== ===========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
PARKER & PARSLEY 83-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
1996 1995
---------- ----------
Revenues:
Oil and gas sales $ 520,877 $ 468,955
Interest income 2,890 2,594
Salvage income from equipment disposals 16,461 21,121
--------- ---------
Total revenues 540,228 492,670
Costs and expenses:
Production costs 263,298 277,577
General and administrative expenses 15,876 14,063
Depletion 103,306 165,366
Abandoned property costs - 12,611
--------- ---------
Total costs and expenses 382,480 469,617
--------- ---------
Net income $ 157,748 $ 23,053
========= =========
Allocation of net income (loss):
General partners $ 52,526 $ 29,689
========= =========
Limited partners $ 105,222 $ (6,636)
========= =========
Net income (loss) per limited
partnership interest $ 4.50 $ (.28)
========= =========
Distributions per limited partnership
interest $ 7.00 $ 6.36
========= =========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PARKER & PARSLEY 83-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
General Limited
partners partners Total
----------- ----------- -----------
Balance at January 1, 1995 $ 818,887 $ 6,829,253 $ 7,648,140
Distributions (50,929) (148,731) (199,660)
Net income (loss) 29,689 (6,636) 23,053
---------- ---------- ----------
Balance at March 31, 1995 $ 797,647 $ 6,673,886 $ 7,471,533
========== ========== ==========
Balance at January 1, 1996 $ 627,985 $ 5,009,377 $ 5,637,362
Distributions (55,803) (163,590) (219,393)
Net income 52,526 105,222 157,748
---------- ---------- ----------
Balance at March 31, 1996 $ 624,708 $ 4,951,009 $ 5,575,717
========== ========== ==========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PARKER & PARSLEY 83-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
1996 1995
---------- ----------
Cash flows from operating activities:
Net income $ 157,748 $ 23,053
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion 103,306 165,366
Salvage income from equipment disposals (16,461) (21,121)
Changes in assets and liabilities:
Increase in accounts receivable (29,196) (12,357)
Increase (decrease) in accounts payable (54,300) 20,785
--------- ---------
Net cash provided by operating activities 161,097 175,726
Cash flows from investing activities:
(Additions) disposals of oil and gas
properties 2,327 (2,418)
Proceeds from salvage income on equipment
disposals 30,488 21,121
--------- ---------
Net cash provided by investing activities 32,815 18,703
Cash flows from financing activities:
Cash distributions to partners (219,393) (199,660)
--------- ---------
Net decrease in cash and cash
equivalents (25,481) (5,231)
Cash and cash equivalents at beginning
of period 244,107 160,065
--------- ---------
Cash and cash equivalents at end of period $ 218,626 $ 154,834
========= =========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
PARKER & PARSLEY 83-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
NOTE 1.
Parker & Parsley 83-B, Ltd. (the "Registrant") is a limited partnership
organized in 1983 under the laws of the State of Texas.
The Registrant engages primarily in oil and gas development and production in
Texas and and is not involved in any industry segment other than oil and gas.
NOTE 2.
In the opinion of management, the unaudited financial statements as of March 31,
1996 of the Registrant include all adjustments and accruals consisting only of
normal recurring accrual adjustments which are necessary for a fair presentation
of the results for the interim period. However, these interim results are not
necessarily indicative of results for a full year.
The financial statements should be read in conjunction with the financial
statements and the notes thereto contained in the Registrant's Report on Form
10-K for the year ended December 31, 1995, as filed with the Securities and
Exchange Commission, a copy of which is available upon request by writing to
Steven L. Beal, Senior Vice President, 303 West Wall, Suite 101, Midland, Texas
79701.
NOTE 3.
On May 25, 1993, a final settlement agreement was negotiated, drafted and
finally executed, ending litigation which had begun on September 5, 1989, when
the Registrant filed suit along with other parties against Dresser Industries,
Inc.; Titan Services, Inc.; BJ-Titan Services Company; BJ- Hughes Holding
Company; Hughes Tool Company; Baker Hughes Production Tools, Inc.; and Baker
Hughes Incorporated alleging that the defendants had intentionally failed to
provide the materials and services ordered and paid for by the Registrant and
other parties in connection with the fracturing and acidizing of 523 wells, and
then fraudulently concealed the shorting practice from Parker & Parsley
Development L.P. ("PPDLP"). The May 25, 1993 settlement agreement called for a
payment of $115 million in cash by the defendants, and Southmark, the
6
<PAGE>
Registrant, and the other plaintiffs indemnified the defendants against the
claims of Jack N. Price. The managing general partner received the funds,
deducted incurred legal expenses, accrued interest, determined the general
partner's portion of the funds and calculated any inter-partnership allocations.
On May 3, 1993, Jack N. Price, the attorney who represented Gary G. "Zeke"
Lancaster in the Federal Court lawsuit, filed suit in State Court in Beaumont
against all of the plaintiff partnerships, including the Registrant and others,
alleging his entitlement to 12% of the settlement proceeds. Price's lawsuit
claim for approximately $13.8 million is predicated on a purported contract
entered into with Southmark Corporation in August 1988 in which he allegedly
binds the Registrant and the other defendants, as well as Southmark. Although
PPDLP believes the lawsuit was without merit and has vigorously defended it,
PPDLP has held in reserve approximately 12.5% of the total settlement (the
"Reserve") pending final resolution of the litigation.
A distribution of $91,000,000 was made to the working interest owners, including
the Registrant, on July 30, 1993. The limited partners received their
distribution of $11,250,167, or $481.39 per limited partnership interest, in
September 1993. The allocation of the lawsuit settlement amount was based on the
original verdict entered on October 26, 1990. The allocation to the working
interest owners in each well (including the Registrant) was based on a ratio of
the relative amount of damages due to overcharges for services and materials
("Materials") and damages for loss of past and future production ("Production"),
each as determined in that initial judgment. Within the Registrant, damages for
Materials were allocated between the partners based on their original sharing
percentages for costs of acquiring and/or drilling of wells. Similarly, damages
related to Production were allocated to the partners in the Registrant based on
their respective share of revenues from the subject wells.
As a condition of the purchase by Parker & Parsley Petroleum Company of Parker &
Parsley Development Company ("PPDC"), which was merged into PPDLP on January 1,
1995, from its former parent in May 1989, PPDC's interest in the lawsuit and
subsequent settlement was retained by the former parent. Consequently, all of
PPDC's share of the settlement related to its separately held interests in the
wells and its partnership interests in the sponsored partnerships (except that
portion allocable to interests acquired by PPDC after May 1989) was paid to the
former parent.
On September 20, 1995, the Beaumont trial judge entered a summary judgment
against Southmark for the $13,790,000 contingent fee sought by Price, together
with prejudgment interest, and also awarded Price an additional $5,498,525 in
attorneys' fees. On January 22, 1996, the trial judge entered an interlocutory
7
<PAGE>
summary judgment against Dresser Industries and Baker Hughes for an amount yet
to be determined. Pursuant to their indemnity obligations, the Registrant,
Southmark, PPDLP and other original plaintiffs have vigorously protected the
rights of both Dresser and Baker Hughes. Southmark has vigorously pursued its
appeal of the judgment, and has posted a supersedeas bond using the Reserve as
collateral. On April 29, 1996, all of the parties, including the Registrant and
Southmark, entered into a $7.4 million settlement with Price which fully and
finally resolves all of the litigation and disputes between the parties,
including the Registrant's indemnity obligations to Dresser and Baker Hughes.
Pursuant to the settlement agreement, all of the pending lawsuits and judgments
will be dismissed, the supersedeas bond released, and the Reserve released as
collateral. It is expected that before the end of the third quarter, the
necessary dismissals and releases will be effected, the managing general partner
will conduct an accounting of income and expenses among the parties, and a final
distribution will be made to the working interest owners, including the
Registrant and its partners.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS(1)
The Registrant was formed September 27, 1983. The general partners of the
Registrant at December 31, 1994 were Parker & Parsley Development Company
("PPDC") and P&P Employees 83-B, Ltd. ("EMPL"), a Texas limited partnership
whose general partner was PPDC, and 1,606 limited partners. On January 1, 1995,
Parker & Parsley Development L.P. ("PPDLP"), a Texas limited partnership, became
the managing general partner of the Registrant and EMPL, by acquiring the rights
and assuming the obligations of PPDC. PPDLP's co-general partner is EMPL. PPDLP
acquired PPDC's rights and obligations as managing general partner of the
Registrant in connection with the merger of PPDC, P&P Producing, Inc. and
Spraberry Development Corporation into MidPar L.P., which survived the merger
with a change of name to PPDLP. The sole general partner of PPDLP is Parker &
Parsley Petroleum USA, Inc. PPDLP has the power and authority to manage, control
and administer all Registrant affairs. The limited partners contributed
$23,370,000 representing 23,370 interests ($1,000 per interest).
Since its formation, the Registrant invested $23,799,196 in various prospects
that were drilled in Texas. Three wells were sold in 1994 and ten wells have
been plugged and abandoned due to unprofitable operations; one in 1985, one in
1987, two in 1989, one in 1990, two in 1991, one in 1993 and two in 1995. The
Registrant received interests in eight additional wells in 1993 due to the
Registrant's back-in after payout provisions. At March 31, 1996, the Registrant
had 46 producing oil and gas wells.
8
<PAGE>
Results of Operations
Revenues:
The Registrant's oil and gas revenues increased to $520,877 from $468,955 for
the three months ended March 31, 1996 and 1995, respectively, an increase of
11%. The increase in revenues resulted from a 10% increase in mcf of gas
produced and sold, an 11% increase in the average price received per barrel of
oil and a 14% increase in the price received per mcf of gas, offset by a 4%
decrease in barrels of oil produced and sold. For the three months ended March
31, 1996, 19,345 barrels of oil were sold compared to 20,252 for the same period
in 1995, a decrease of 907 barrels. For the three months ended March 31, 1996,
68,398 mcf of gas were sold compared to 62,202 for the same period in 1995, an
increase of 6,196 mcf. The decrease in oil production was primarily due to the
decline characteristics of the Registrant's oil and gas properties. The increase
in gas production was the result of operational changes on several wells.
Management expects a certain amount of decline in production in the future until
the Registrant's economically recoverable reserves are fully depleted.
The average price received per barrel of oil increased $1.90 from $17.24 for the
three months ended March 31, 1995 to $19.14 for the same period in 1996 while
the average price received per mcf of gas increased from $1.93 for the three
months ended March 31, 1995 to $2.20 for the same period in 1996. The market
price for oil and gas has been extremely volatile in the past decade, and
management expects a certain amount of volatility to continue in the foreseeable
future. The Registrant may therefore sell its future oil and gas production at
average prices lower or higher than that received during the three months ended
March 31, 1996.
Salvage income of $16,461 for the three months ended March 31, 1996 was derived
from equipment credits received on three wells plugged and abandoned in prior
years. During the same period in 1995, $21,121 in salvage income was received
from equipment credits on one fully depleted well.
Costs and Expenses:
Total costs and expenses decreased to $382,480 for the three months ended March
31, 1996 as compared to $469,617 for the same period in 1995, a decrease of
$87,137, or 19%. This decrease was due to declines in production costs,
depletion and abandoned property costs, offset by an increase in general and
administrative expenses ("G&A").
9
<PAGE>
Production costs were $263,298 for the three months ended March 31, 1996 and
$277,577 for the same period in 1995 resulting in a $14,279 decrease, or 5%. The
decrease was due to less well repair and maintenance costs.
G&A's components are independent accounting and engineering fees, computer
services, postage and managing general partner personnel costs. During this
period, G&A increased, in aggregate, 13% from $14,063 for the three months ended
March 31, 1995 to $15,876 for the same period in 1996.
Depletion was $103,306 for the three months ended March 31, 1996 compared to
$165,366 for the same period in 1995. This represented a decrease in depletion
of $62,060, or 38%, primarily attributable to the adoption of the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
effective for the fourth quarter of 1995 and the reduction of net depletable
basis resulting from the charge taken upon such adoption. Depletion was computed
property-by-property utilizing the unit-of-production method based upon the
dominant mineral produced, generally oil. Oil production decreased 907 barrels
for the three months ended March 31, 1996 from the same period in 1995, while
oil reserves of barrels were revised downward by 9,760 barrels.
On May 25, 1993, a final settlement agreement was negotiated, drafted and
finally executed, ending litigation which had begun on September 5, 1989, when
the Registrant filed suit along with other parties against Dresser Industries,
Inc.; Titan Services, Inc.; BJ-Titan Services Company; BJ- Hughes Holding
Company; Hughes Tool Company; Baker Hughes Production Tools, Inc.; and Baker
Hughes Incorporated alleging that the defendants had intentionally failed to
provide the materials and services ordered and paid for by the Registrant and
other parties in connection with the fracturing and acidizing of 523 wells, and
then fraudulently concealed the shorting practice from PPDLP. The May 25, 1993
settlement agreement called for a payment of $115 million in cash by the
defendants, and Southmark, the Registrant, and the other plaintiffs indemnified
the defendants against the claims of Jack N. Price. The managing general partner
received the funds, deducted incurred legal expenses, accrued interest,
determined the general partner's portion of the funds and calculated any
inter-partnership allocations.
On May 3, 1993, Jack N. Price, the attorney who represented Gary G. "Zeke"
Lancaster in the Federal Court lawsuit, filed suit in State Court in Beaumont
against all of the plaintiff partnerships, including the Registrant and others,
alleging his entitlement to 12% of the settlement proceeds. Price's lawsuit
claim for approximately $13.8 million is predicated on a purported contract
entered into with Southmark Corporation in August 1988 in which he allegedly
binds the Registrant and the other defendants, as well as Southmark. Although
10
<PAGE>
PPDLP believes the lawsuit was without merit and has vigorously defended it,
PPDLP has held in reserve approximately 12.5% of the total settlement (the
"Reserve") pending final resolution of the litigation.
A distribution of $91,000,000 was made to the working interest owners, including
the Registrant, on July 30, 1993. The limited partners received their
distribution of $11,250,167, or $481.39 per limited partnership interest, in
September 1993. The allocation of the lawsuit settlement amount was based on the
original verdict entered on October 26, 1990. The allocation to the working
interest owners in each well (including the Registrant) was based on a ratio of
the relative amount of damages due to overcharges for services and materials
("Materials") and damages for loss of past and future production ("Production"),
each as determined in that initial judgment. Within the Registrant, damages for
Materials were allocated between the partners based on their original sharing
percentages for costs of acquiring and/or drilling of wells. Similarly, damages
related to Production were allocated to the partners in the Registrant based on
their respective share of revenues from the subject wells.
As a condition of the purchase by Parker & Parsley Petroleum Company of PPDC,
which was merged into PPDLP on January 1, 1995, from its former parent in May
1989, PPDC's interest in the lawsuit and subsequent settlement was retained by
the former parent. Consequently, all of PPDC's share of the settlement related
to its separately held interests in the wells and its partnership interests in
the sponsored partnerships (except that portion allocable to interests acquired
by PPDC after May 1989) was paid to the former parent.
On September 20, 1995, the Beaumont trial judge entered a summary judgment
against Southmark for the $13,790,000 contingent fee sought by Price, together
with prejudgment interest, and also awarded Price an additional $5,498,525 in
attorneys' fees. On January 22, 1996, the trial judge entered an interlocutory
summary judgment against Dresser Industries and Baker Hughes for an amount yet
to be determined. Pursuant to their indemnity obligations, the Registrant,
Southmark, PPDLP and other original plaintiffs have vigorously protected the
rights of both Dresser and Baker Hughes. Southmark has vigorously pursued its
appeal of the judgment, and has posted a supersedeas bond using the Reserve as
collateral. On April 29, 1996, all of the parties, including the Registrant and
Southmark, entered into a $7.4 million settlement with Price which fully and
finally resolves all of the litigation and disputes between the parties,
including the Registrant's indemnity obligations to Dresser and Baker Hughes.
Pursuant to the settlement agreement, all of the pending lawsuits and judgments
will be dismissed, the supersedeas bond released, and the Reserve released as
11
<PAGE>
collateral. It is expected that before the end of the third quarter, the
necessary dismissals and releases will be effected, the managing general partner
will conduct an accounting of income and expenses among the parties, and a final
distribution will be made to the working interest owners, including the
Registrant and its partners.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities:
Net cash provided by operating activities decreased to $161,097 during the three
months ended March 31, 1996, an 8% decrease from the same period in 1995. This
decrease was due to an increase in expenditures for production costs, offset by
an increase in oil and gas sales receipts and a decrease in abandoned property
costs. The increase in production cost expenditures was attributable to
additional well repair and maintenance costs. The increase in oil and gas sales
receipts was due to an increase in mcf of gas produced and sold and higher
average prices received for both oil and gas, offset by a decrease in barrels of
oil produced and sold. There were no abandoned property costs for the period
ended March 31, 1996 compared to $12,611 for the same period in 1995.
Net Cash Provided by Investing Activities:
The Registrant's investing activities for the three months ended March 31, 1996
resulted in $2,327 in proceeds received from the disposal of oil and gas
equipment on active properties. The three months ended March 31, 1995 included
$2,418 in expenditures related to repair and maintenance activity on various oil
and gas properties.
Proceeds of $30,488 were received during the three months ended March 31, 1996
from the disposal of oil and gas equipment on three wells plugged and abandoned
in prior years. During the three months ended March 31, 1995, proceeds of
$21,121 from equipment credits were received on one fully depleted well.
Net Cash Used in Financing Activities:
For the three months ended March 31, 1996, cash was sufficient for distributions
to the partners of $219,393 of which $163,590 was distributed to the limited
partners and $55,803 to the general partners. For the same period ended March
31, 1995, cash was sufficient for distributions to the partners of $199,660 of
which $148,731 was distributed to the limited partners and $50,929 to the
general partners.
12
<PAGE>
It is expected that future net cash provided by operating activities will be
sufficient for any capital expenditures and any distributions. As the production
from the properties declines, distributions are also expected to decrease.
- - ---------------
(1) "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward looking statements that involve
risks and uncertainties. Accordingly, no assurances can be given that
the actual events and results will not be materially different than the
anticipated results described in the forward looking statements.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is a party to material litigation which is described in Note 3 of
Notes to Financial Statements above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
13
<PAGE>
PARKER & PARSLEY 83-B, LTD.
(A Texas Limited Partnership)
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PARKER & PARSLEY 83-B, LTD.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: May 13, 1996 By: /s/ Steven L. Beal
--------------------------------------
Steven L. Beal, Senior Vice
President and Chief Financial
Officer of PPUSA
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000743457
<NAME> 83B.TXT
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 218,626
<SECURITIES> 0
<RECEIVABLES> 226,150
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 444,776
<PP&E> 20,973,483
<DEPRECIATION> 15,770,812
<TOTAL-ASSETS> 5,647,447
<CURRENT-LIABILITIES> 71,730
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,575,717
<TOTAL-LIABILITY-AND-EQUITY> 5,647,447
<SALES> 520,877
<TOTAL-REVENUES> 540,228
<CGS> 0
<TOTAL-COSTS> 382,480
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 157,748
<INCOME-TAX> 0
<INCOME-CONTINUING> 157,748
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 157,748
<EPS-PRIMARY> 4.50
<EPS-DILUTED> 0
</TABLE>
